OnAudience.com I Report 2017 Ad blocking in the Internet

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1 OnAudience.com I Report 2017 Ad blocking in the Internet

2 Table of contents Introduction 1 Ad blocked page views 2 Impact on display advertising 8 Impact on e-commerce 11 About 13

3 Introduction 1 This report includes an update of ad blocking data presented in Its reach covers over 60 markets worldwide and it has been followed up with estimated values of display advertising and the e-commerce market values.this study has been run by OnAudience.com, a part of Cloud Technologies group, and supported by the PHD Media Direction, a part of Omnicom Group, to show the scale of ad blocking and raise awareness of this issue in the entire industry, as well as present the impact of ad blocking on the e-commerce market. This study includes: 1. comparison of key market research concerning the scale of ad blocking, 2. display market value and estimated loss due to ad blocking, 3. e-commerce turnover generated by ad blocking users. This study focuses on: 1. measured data, instead of reported data in order to eliminate unaware ad block user, 2. page views, instead of unique users in order to show real impact on on-line advertising, 3. web traffic, including desktop and mobile browsers. Blocking on-line advertisements is a complex phenomenon that affects the business models used by on-line publishers. In particular, on-line ad blocking contributes to an erosion of publishers revenue and consequently undermines the sources of funding of the content published or the services provided. In the long run, it can lead to a consolidation of the online advertising market and thus cause a significant change in the way operations are funded, particularly those run by local publishers. OnAudience.com has an on-line ad serving system that is resistant to ad blocking plugins ( UnBlock ). It simply encapsulates all the communication and is fully transparent for currently used ad systems. The solution successfully handles all common advertising formats, including HTML5, Rich Media and Video creatives. For publishers, it reclaims the lost revenues. For users, it keeps the Internet free of charge.

4 Ad blocked page views 2

5 Ad blocked page views 3 Country Rate Country Rate Albania 18% Argentina Armenia 21% Australia 34% Azerbaijan 14% Austria 36% Belarus Belgium 37% Bolivia 14% Bosnia and Herzegovina 28% Brazil 12% Bulgaria 29% Canada 32% Chile 30% China 31% Colombia 20% Croatia Cyprus 28% Czech Republic Denmark 40% Ecuador 25% Estonia 24% Finland 37% France 37% Georgia 18% Germany 41% Greece 44% Hungary 38% Iceland 33% India 22% Ireland 39% Italy 23% Japan Kazahstan 15% Latvia Lithuania 31% Luxemburg 33% Macedonia 23% Malta 34% Mexico 16% Moldova 25% Mongolia 18% Montenegro 22% Netherlands 39% Norway 42% Paraguway 5% Peru 13% Poland 46% Portugal Romania 29% Russia 34% Serbia 29% Slowakia 30% Slowenia 23% Spain 36% Sweden 34% Swtitzerland 35% Turkey 25% Ukraine 36% United Kindgom 39% USA Uruguay 30% Venezuela 10%

6 4

7 Ad blocked page views Detailed data 5 Country OnAudience.com PV Change YoY IAB UU TNS UU Albania 18% 21% -13% Argentina 22% +18% Armenia 21% 14% +44% Australia 34% 24% +38% 1 Azerbaijan 14% 11% +25% Austria 36% 31% +18% Belarus +5% Belgium 37% 36% +2% 29% 3 Bolivia 14% 12% +18% Bosnia and Herzegovina 28% +4% Brazil 12% 4% +232% Bulgaria 29% +10% Canada 32% +19% 18% 2 Chile 30% 23% +29% China 31% 23% +36% 21% 3 Colombia 20% 18% +12% Croatia 19% +38% Cyprus 28% 19% +50% Czech Republic 25% +6% Denmark 40% 38% +5% Ecuador 25% 24% +4% Estonia 24% 22% +9% 1 IAB Australia, November IAB Canada, May Kantar TNS, Connected Life 2017

8 Ad blocked page views Detailed data 6 Country OnAudience.com PV Change YoY IAB UU TNS UU Finland 37% 30% +25% France 37% 35% +5% 30% 1 Georgia 18% 13% +36% Germany 41% 32% +29% 19% 2 39% 3 Greece 44% +66% Hungary 38% +45% Iceland 33% 31% +7% India 22% 24% -10% Ireland 39% 37% +4% 29% 3 Italy 23% 21% +9% 23% 3 Japan +4% 13% 3 Kazahstan 15% 22% +32% Latvia 23% +13% Lithuania 31% 24% +28% Luxemburg 33% +24% Macedonia 23% 16% +41% Malta 34% +28% Mexico 16% 10% +58% Moldova 25% 19% +35% Mongolia 18% 22% -19% Montenegro 22% 13% +64% Netherlands 39% 37% +6% 1 IAB France, March OVK BVDW, November Kantar TNS, Connected Life 2017

9 Ad blocked page views Detailed data 7 Country OnAudience.com PV Change YoY IAB UU TNS UU Norway 42% 39% +8% Paraguway 5% 4% +35% Peru 13% 9% +47% Poland 46% 42% +8% 36% 1 54% 5 Portugal 28% -4% Romania 29% 24% +20% 29% 2 Russia 34% 28% +24% Serbia 29% 28% +5% Slowakia 30% +8% Slowenia 23% 24% -6% Spain 36% 28% +29% 3 5 Sweden 34% +29% Swtitzerland 35% 30% +16% 45% 5 Turkey 25% 20% +23% Ukraine 36% 30% +20% United Kindgom 39% 39% +1% 22% 4 5 USA 22% +16% 25% 5 Uruguay 30% 29% +6% Venezuela 10% 9% +14% 1 IAB Poland, September IAB Romania, March IAB Spain, March IAB UK, February Kantar TNS, Connected Life 2017

10 Impact on display advertising 8 Herewith estimated data concerning the value of display advertising markets together with an estimated value of ad blocked inventory. The measurement of the value of on-line advertising market is a complex process and presented data are intended solely to illustrate the scale of the phenomenon of ad blocking. Fixed ecpm level was assumed while estimating the value of the ad blocked space, regardless of the larger supply of advertising space $42 B estimated global loss due to ad blocking $100 B global display market value 2016 $28 B estimated global loss due to ad blocking $84 B global display market value

11 Impact on display advertising 9 Country Display market value Estimated loss Argentina $544 $399 $192 $113 Australia $2,397 $2,138 $1,215 $690 Austria $362 $298 $208 $133 Belarus $14 $11 $5 $4 Belgium $715 $588 $412 $329 Bosnia and Herzegovina $5 $4 $2 $2 Brazil $1,691 $1,470 $236 $56 Bulgaria $36 $30 $15 $11 Canada $1,807 $1,626 $864 $606 Chile $125 $111 $53 $33 China $22,693 $17,024 $10,020 $4,965 Colombia $87 $76 $21 $16 Croatia $35 $29 $13 $7 Czech Republic $527 $434 $188 $143 Denmark $413 $388 $277 $238 Ecuador $18 $15 $6 $5 Estonia $23 $19 $7 $5 Finland $195 $181 $114 $76 France $1,435 $1,353 $829 $722 Germany $1,913 $1,812 $1,318 $838 Greece $84 $69 $67 $25 Hungary $110 $90 $66 $32 Values in millions

12 Impact on display advertising $169 $117 $316 $2,046 $95 $1 $449 $246 $5 $292 $11 $272 $4 $29 $10 $279 $198 $107 $93 $21 $3,352 $11,048 $531 $197 $1,197 $5,419 $828 $2 $772 $393 $50 $399 $35 $713 $11 $78 $32 $726 $554 $253 $365 $48 $5,276 $38,140 $693 $239 $1,313 $5,944 $998 $3 $813 $424 $60 $485 $42 $815 $14 $94 $39 $775 $611 $307 $444 $58 $6,026 $44,967 $193 $152 $386 $2,117 $194 $1 $516 $303 $9 $409 $17 $423 $6 $40 $11 $433 $313 $162 $148 $33 $3,870 $15,865 India Ireland Italy Japan Mexico Moldova Netherlands Norway Peru Poland Romania Russia Serbia Slowakia Slowenia Spain Sweden Swtitzerland Turkey Ukraine United Kindgom USA Country Display market value Estimated loss Values in millions

13 Impact on e-commerce 11 Herewith estimated data concerning the turnover in the e-commerce segment and the value of users who block on-line advertising. Special attention should be drawn to the growing participation of users who block on-line advertising in the subsequent stages of the ordering process. Visitor is a person who is entering online store. In Europe 32% of page views are generated by Visitors using adblock plugins. 32% Shopper is a person who has started purchasing process in online store. In Europe 34% of page views are generated by Shoppers using adblock plugins. 34% Buyer is a person who purchases in online store. In Europe 38% of page views are generated by Buyers using adblock plugins. 38% > $2,000 B global e-commerce turnover > $600 B global turnover by ad blocking users

14 Impact on e-commerce 12 E-commerce turnover Ad blocked turnover E-commerce turnover Ad blocked turnover Australia $22,200 $7,468 Austria $7,500 $2,734 Belgium $8,200 $2,997 Brazil $17,105 $2,095 Canada $35,700 $11,553 China $766,500 $234,779 Czech Republic $4,300 $1,132 Denmark $11,700 $4,691 Finland $7,200 $2,663 France $64,900 $23,760 Germany $59,700 $24,352 Greece $3,800 $1,686 Hungary $1,100 $415 Ireland $5,900 $2,297 Italy $16,600 $3,768 Japan $114,402 $30,042 Luxemburg $600 $195 Netherlands $16,100 $6,253 Norway $7,900 $3,291 Poland $7,600 $3,476 Portugal $3,300 $883 Romania $1,500 $437 Russia $20,500 $7,003 Slowakia $460 $136 Slowenia $250 $57 Spain $18,200 $6,521 Sweden $9,700 $3,289 Swtitzerland $8,500 $2,936 Turkey $8,500 $2,131 Ukraine $1,400 $503 United Kindgom $157,100 $61,442 USA $595,100 $155,202 Values in millions

15 About Method 13 On-line ads are blocked by software, which can work on different levels. However, the software is most often installed as a plugin to the web browser which verifies: 1 2 internet domains and blocks traffic from known sources of on-line advertising (e.g. adservers), the content and hides elements typical for on-line advertising (e.g. keywords, image dimensions). OnAudience.com owns a data management platform and collects anonymous information about on-line user behaviours. OnAudience.com analyses data generated on the Internet by over 3 billion devices, and then uses it to profile users and target on-line advertising. Definitions Unique User UU, Unique User, is a user identified through a cookie file or a similar technology. Page View PV, Page View, is a view of a website calculated on pixel requests or similar technology. Sources Display market value has been estimated on PHD Media Direction internal data with support of emarketer and Adex publicly available data. E-commerce turnover has been estimated on data published by E-commerce Foundation.

16 About OnAudience.com 14 For advertisers and publishers OnAudience.com is the only platform that successfully converts blocked impressions and Big Data into revenues. Unlike other platforms, OnAudience.com provides comprehensive services and products that effectively enriches and monetizes your data. OnAudience.com provides Big Data tools and services for on-line marketing on over 40 markets in Europe and North America. The company has one of the largest 3rd party data sets in the World that consist of over 3 billion user profiles. OnAudience.com integrates data management, including DMP and Data Exchange with programmatic buying, including DSP and Mailing Exchange. It is a tailor made solution for performance marketing focused on prospecting customers and e-commerce platforms. OnAudience.com is a part of Cloud Technologies S.A. group, one of the fastest growing companies in Europe. Cloud Technologies S.A. is the online advertising leader in the segment of Big Data CloudComputing. The company has unique competencies in optimizing advertising campaigns based on automated media buying (Programmatic Buying, Real-Time Bidding).

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